Market Insights > Daily Market Analysis

4 September 2025,09:08

Daily Market Analysis

Australian Dollar Extends Gains on Strong Data, Trade Surplus; Hawkish RBA Bets Rise

4 September 2025, 09:08

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Key Takeaways:

*Stronger GDP growth (+0.6% QoQ) and a AUD 7.31B trade surplus reinforced the Aussie’s bullish momentum.

*Persistent inflation and resilient domestic demand are leading markets to scale back rate-cut expectations.

*AUD/USD is testing 0.6800 resistance, with scope to target 0.6850 if risk sentiment and China’s outlook remain supportive.

Market Summary:

The Australian dollar advanced for a second consecutive week, with AUD/USD gaining nearly 2% as stronger-than-expected economic data reinforced the currency’s upward momentum. Australia’s GDP grew 0.6% quarter-on-quarter, exceeding market consensus, driven by a rebound in household spending and improved domestic demand. The robust print has fueled expectations that inflationary pressures may prove more persistent, supporting a hawkish repricing of Reserve Bank of Australia rate expectations.

Further reinforcing the Aussie’s strength, the latest trade balance data showed a surplus of AUD 7.31 billion, comfortably above forecasts. The result reflects ongoing resilience in both export volumes and import compression, underscoring the economy’s external robustness amid global demand uncertainties.

The combination of firm domestic activity and a healthy trade position has led markets to reassess the timing and extent of potential RBA easing, with swap markets now pricing in a more gradual easing cycle compared to major peers like the Fed and ECB.

AUD/USD is now trading near three-week highs, with technical resistance emerging near the 0.6800 handle. A sustained break above this level could open the path toward the late-May high near 0.6850, particularly if global risk sentiment remains supportive and China-related concerns continue to ease.

Technical Analysis

AUDNZD, H4

The Australian dollar continues to trade with a firm bullish bias against the New Zealand dollar, maintaining position within a well-defined uptrend channel after breaking decisively above the key psychological resistance level of 1.1000. The pair has advanced to its highest level since March, supported by relative monetary policy divergence and stronger Australian economic data.

Although the pair is experiencing a minor technical retracement from recent highs, it remains well-supported above its immediate support level near 1.1115. A sustained hold above this level would be viewed as a consolidation within the broader uptrend, potentially setting the stage for further gains toward the next resistance zone near 1.1250.

Momentum indicators continue to support the constructive outlook. The Relative Strength Index is hovering near overbought territory, reflecting persistent buying pressure, while the Moving Average Convergence Divergence remains in positive territory following a recent bullish crossover and continues to trend higher, confirming that upward momentum is strengthening.

Resistance level: 1.1170, 1.1250

Support level: 1.1055, 1.0990

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